Price War Pounds Intel

Intel said the increase in capex will be more than offset by savings in a variety of areas. The company said it is on track to generate $2 billion in spending and manufacturing cost savings in 2007, in addition to the savings it will generate from a previously announced restructuring effort.

As a result of the restructuring, Intel said its headcount at the end of 2006 totaled 94,100 people, vs. 102,500 at the end of the second quarter.

Intel said chipset unit sales in the fourth quarter were flat compared with the third quarter, while motherboard units were lower sequentially.

The company's fourth-quarter EPS was helped by the sale of its communications-chip business to Marvell Technology (MRVL Quote), but included an impairment stemming from the decision to sell a chip-fabrication facility in Colorado. The net impact was roughly a 2.5 cents-a-share contribution to EPS.